Frequently Asked Questions –
Merchant Account Rates & Fees

What is a Discount Rate?
The processing fee associated with a Merchant Account.  It is the percentage of the gross transaction amount that the acquiring bank and processor deduct (along with all other rates and fees) prior to transferring the deposit into the merchant’s bank account.  Typical Discount Rates internationally range from 3 to 10% of the credit card transactions, depending on the merchant’s type of business and various other factors determined by the specific acquiring bank and/or processor at the time of underwriting.  High volume and/or low risk accounts may qualify for lower Discount Rates.  Well established businesses with good processing history can also qualify for a lower Discount Rate.

What is a Per Transaction Fee?
The fee associated with each transaction processed through a Merchant Account.  It is a nominal amount charged on each transaction. Typical Per Transaction Fees through International Banks range from USD 0.35 to 1.00 of each transaction.  This is similar and in addition to the Discount Rate in that it is also based on funds processed.

What is a Chargeback Fee?
The fee charged for each Chargeback the merchant account experiences.  Typical Chargeback Fees range from USD 25 to 40 per Chargeback.

What is a Rolling Reserve?
Backup funds (usually 10% of total processing volume for a period of six months) to protect against Excessive Chargebacks that might occur after the merchant has already been settled.  The Payout Arrears helps to mitigate this risk, but if there are still chargebacks that come through after the merchant’s funds have been exhausted (minus rate and fee charges), then the reserve is used to offset the chargebacks as well as the fees imposed for each chargeback if necessary.  One reason this would be necessary is if the merchant decreases their processing volume, thus resulting in rates, fees, and potential chargebacks totaling more than is available in their new weekly processing amounts.  A reserve is usually calculated on a weekly basis on settlement statements and paid out after being held for six months.  So, with a six month, ‘Rolling’ Reserve, the first month’s reserve is paid out at the beginning of the seventh month, the second month’s paid out the eighth month, and so on as the total six month reserve is rolled into the next month continuing for the life of the merchant account.

Note that Acquiring Banks outside the US are generally the ones who impose reserves in exchange for being more lenient on the type of businesses they will take, merchants having higher monthly processing volumes without sufficient history, merchants sub par processing history, and/or allowing for higher chargeback thresholds; all requiring more cushion to offset this more relaxed threshold for acceptance into their financial institution for the acquiring of credit card transactions.
On the contrary, US Banks don’t impose Reserves since they generally don’t take risks on such merchants that would need Reserves imposed.

Does IBC Merchant Accounts charge an Application Fee for the Merchant Accounts it provides?
No.  There are no upfront application fees.  Once a merchant’s application is approved for processing and the MID is ready to be issued, the Acquirer and/or Processor might charge a setup fee for establishing the MID and tech work to integrate the Online Payment Gateway to the new MID.